"The market is under the government's control...and investor
sentiment has stabilised," said Fu Xuejun, analyst at Huarong
Securities Co.

"Over the past few trading sessions, there were few signs of
panic selling. The market is getting back to normal."

In a sign of Beijing's fading concerns over liquidity
shortage, state margin lender China Securities Finance Corp,
which was tasked with stabilising the market, has delayed its
plan to raise 100 billion yuan via short-term bills, four
sources familiar with the matter told Reuters on Monday.

The official China Securities Journal said on Tuesday there
is little room for China's volatile stock markets to dive
further in the near term due to ample liquidity and a recovery
in investor confidence.

Telecommunications and transport
stocks outperformed the market, while banking shares remained
weak. The CSI300 bank index was down 1.5 percent.
(Reporting by Samuel Shen and Pete Sweeney; Editing by
Jacqueline Wong)